Elmira Savings Bank Reports Second Quarter Earnings

ELMIRA, N.Y., July 19, 2017 (GLOBE NEWSWIRE) --

Elmira Savings Bank ESBK

Highlights

Net income was $1,108,000 and $2,187,000 for the three and six months ended June 30, 2017 compared to $1,057,000 and $2,093,000 for the same periods in 2016.

Diluted earnings per share were $.28 per share and $.59 per share for the three and six months ended June 30, 2017 compared to $.30 per share and $.60 per share for the same periods in 2016.

Return on average assets was .79% and .78% for the three and six months ended June 30, 2017 compared to .73% for both of the same periods in 2016.

Return on average equity was 7.01% and 7.35% for the three and six months ended June 30, 2017 compared to 7.65% and 7.58% for the same periods in 2016.

"We are pleased with the year-over-year improvement in earnings, highlighted by an increase in our net interest margin which has risen by 16 basis points year-to-year to 3.34% for the first half of 2017," said Thomas M. Carr, President and CEO. Carr continued, "In addition to the second quarter earnings improvement, we are also pleased to have successfully completed the capital raise and recently opened our new branch office in Ithaca."

Net Income

Net income totaled $2,187,000 for the six months ended June 30, 2017, an increase of $94,000 or 5% from the $2,093,000 of net income recorded for the same period in 2016. This increase was the net result of an increase in net interest income of $205,000, a decrease in noninterest expense of $129,000, and a decrease in the provision for loan losses of $30,000, offset by a decrease in noninterest income of $176,000 and an increase in tax expense of $94,000.

Net income totaled $1,108,000 for the three months ended June 30, 2017, an increase of $51,000 or 5% from the $1,057,000 recorded for the same period in 2016. This increase was the net result of an increase in net interest income of $132,000 and a decrease in noninterest expense of $110,000, offset by a decrease in noninterest income of $86,000, an increase in the provision for loan losses of $70,000, and an increase in tax expense of $35,000.

Basic and diluted earnings per share for the six months ended June 30, 2017 were both $.59 per share compared to $.60 per share for both for the same period in 2016. Basic and diluted earnings per share for the three months ended June 30, 2017 were both $.28 per share compared to $.31 per share and $.30 per share for the same period in 2016.

The decrease in earnings per share and return on average equity for both the three and six months ending June 30, 2017 versus the same periods in 2016, despite the higher levels of net income for 2017, reflects the impact of the private placement of 548,430 common shares in April 2017.

Net Interest Margin

The net interest margin for the six months ended June 30, 2017 was 3.34% compared to 3.18% for the same period in 2016. The yield on average earning assets was 4.13% for the six months ended June 30, 2017 compared to 4.07% for the same period in 2016. The average cost of interest-bearing liabilities was .94% for the six months ended June 30, 2017 compared to 1.04% for the same period in 2016.

The net interest margin for the three months ended June 30, 2017 was 3.36% compared to 3.17% for the same period in 2016. The average yield on earning assets was 4.15% for the three months ended June 30, 2017 compared to 4.06% for the same period in 2016. The average cost of interest-bearing liabilities was .94% for the three months ended June 30, 2017 compared to 1.04% for the same period in 2016.

Assets

Total assets increased $882,000 or 0.2% to $574.3 million at June 30, 2017 compared to $573.5 million at December 31, 2016. Loans, including loans held for sale, decreased 0.7% to $456.5 million at June 30, 2017 compared to December 31, 2016. The available-for-sale investment portfolio decreased $5.2 million from December 31, 2016 to June 30, 2017.

Nonperforming Loans

Our nonperforming loans to total loans ratio has decreased to 0.74% at June 30, 2017 from 1.11% at December 31, 2016. Net loan charge-offs to average loans for the six months ended June 30, 2017 of 0.07% increased from 0.04% for the six months ended June 30, 2016. The allowance for loan losses was 0.95% of total loans at June 30, 2017 and 0.94% of total loans at December 31, 2016.

Liabilities

Deposits total $460.1 million at June 30, 2017, a decrease of $9.4 million or 2.0%. The $9.4 million decrease consists of a $13.2 million decrease in time deposits and a $4.0 million decrease in money market accounts, offset by an increase in interest bearing transaction accounts of $1.1 million, a $47,000 increase in savings accounts, and a $6.7 million increase in noninterest-bearing accounts. Borrowed funds remained unchanged from December 31, 2016 at $42.0 million.

Shareholders' Equity

Shareholders' equity increased $9.6 million to $65.2 million at June 30, 2017 compared to December 31, 2016. The increase in shareholders' equity includes the impact of the gross $9.5 million received from the private placement of 548,430 common shares in April 2017. The current level of shareholders' equity equates to a book value per share of $16.77 at June 30, 2017, compared to $16.74 at December 31, 2015. Dividends declared and paid for common shareholders were $0.23 and $0.46 for the three and six months ended for both June 30, 2017 and 2016.

Elmira Savings Bank, with $574.3 million in total assets, is insured by the Federal Deposit Insurance Corporation (FDIC) and is a state-chartered bank with six offices in Chemung County, NY; three offices in Tompkins County, NY; two offices in Steuben County, NY; one office in Cayuga County, NY; one office in Schuyler County; and a loan center in Broome County, NY.

Except for the historical information contained herein, the matters discussed in this news release are forward looking statements that involve the risks and uncertainties, including the timely availability and acceptance of Bank products, the impact of competitive products and pricing, the management of growth, and other risks detailed from time to time in the Bank's regulatory reports.


ELMIRA SAVINGS BANK
CONSOLIDATED BALANCE SHEET
(unaudited)

(in thousands, except for share and per share data)	June 30,			December 31,
		2017			2016		% Change
ASSETS

Cash and due from banks	$	31,542		$	24,195		30.4	%
Federal funds sold and other short-term investments		98			99		-1.0	%
Total cash and cash equivalents		31,640			24,294		30.2	%

Securities available for sale, at fair value		27,383			32,581		-16.0	%
Securities held to maturity - fair value $8,389
at June 30, 2017 and $8,679 at December 31, 2016		8,245			8,519		-3.2	%
Federal Reserve and Federal Home Loan Bank (FHLB) stock, at cost		9,954			9,811		1.5	%

Loans held for sale		4,172			3,597		16.0	%

Loans receivable		452,322			455,931		-0.8	%
Less: Allowance for loan losses		4,298			4,263		0.8	%
Net loans		448,024			451,668		-0.8	%

Premises and equipment, net		15,248			12,634		20.7	%
Bank-owned life insurance		13,783			13,592		1.4	%
Accrued interest receivable		990			1,552		-36.2	%
Intangible assets, net		9			20		-55.0	%
Goodwill		12,320			12,320		0.0	%
Other assets		2,564			2,862		-10.4	%
Total assets	$	574,332		$	573,450		0.2	%

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits	$	460,140		$	469,547		-2.0	%
Borrowings		42,000			42,000		0.0	%
Other liabilities		6,912			6,180		11.8	%
Total liabilities		509,052			517,727		-1.7	%

Shareholders' equity:
Preferred stock, $1 par value; $1,000 liquidation value per issued share; 5,000,000 shares
authorized; 10,000 shares issued at June 30, 2017 and at December 31, 2016		9,700			9,700		0.0	%
Common stock, $1 par value; authorized 5,000,000 shares; 3,404,925 shares
issued at June 30, 2017 and 2,844,670 shares issued at December 31, 2016		3,405			2,845		19.7	%
Additional paid-in capital		50,080			41,644		20.3	%
Retained earnings		4,749			4,407		7.8	%
Treasury stock, at cost - 93,883 shares at June 30, 2017
and 98,118 shares at December 31, 2016		(2,802	)		(2,907	)	-3.6	%
Accumulated other comprehensive income		96			(19	)	-605.3	%
Total Elmira Savings Bank shareholders' equity		65,228			55,670		17.2	%
Noncontrolling interest		52			53		-1.9	%
Total shareholders' equity		65,280			55,723		17.2	%
Total liabilities and shareholders' equity	$	574,332		$	573,450		0.2	%

ELMIRA SAVINGS BANK
CONSOLIDATED STATEMENT OF INCOME
(unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in thousands, except for per share data)		2017		2016	% Change			2017		2016	% Change

Interest and dividend income:
Interest and fees on loans	$	4,789	$	4,744	0.9	%	$	9,524	$	9,473	0.5	%
Interest and dividends on securities
Taxable		228		242	-5.8	%		472		527	-10.4	%
Non-taxable		156		205	-23.9	%		345		424	-18.6	%
Total interest and dividend income		5,173		5,191	-0.3	%		10,341		10,424	-0.8	%

Interest expense:
Interest on deposits		720		763	-5.6	%		1,450		1,497	-3.1	%
Interest on borrowings		267		374	-28.6	%		532		773	-31.2	%
Total interest expense		987		1,137	-13.2	%		1,982		2,270	-12.7	%
Net interest income		4,186		4,054	3.3	%		8,359		8,154	2.5	%
Provision for loan losses		155		85	82.4	%		195		225	-13.3	%
Net interest income after provision for loan losses		4,031		3,969	1.6	%		8,164		7,929	3.0	%

Noninterest income:
Service fees		361		354	2.0	%		740		702	5.4	%
Gain on sale of loans held for sale		686		749	-8.4	%		1,269		1,271	-0.2	%
Gain on sale of securities		-		-	-			-		180	-100.0	%
Other service fees		186		186	0.0	%		362		366	-1.1	%
Earnings on bank-owned life insurance		95		108	-12.0	%		191		205	-6.8	%
Other		24		41	-41.5	%		51		65	-21.5	%
Total noninterest income		1,352		1,438	-6.0	%		2,613		2,789	-6.3	%

Noninterest expense:
Salaries and benefits		1,902		1,969	-3.4	%		3,861		3,896	-0.9	%
Net occupancy		360		353	2.0	%		772		722	6.9	%
Equipment		306		301	1.7	%		618		576	7.3	%
Marketing and public relations		207		192	7.8	%		407		393	3.6	%
Professional fees		184		194	-5.2	%		352		374	-5.9	%
Other		822		882	-6.8	%		1,599		1,777	-10.0	%
Total noninterest expense		3,781		3,891	-2.8	%		7,609		7,738	-1.7	%
Income before income taxes		1,602		1,516	5.7	%		3,168		2,980	6.3	%
Income taxes		494		459	7.6	%		981		887	10.6	%
Net income		1,108		1,057	4.8	%		2,187		2,093	4.5	%
Less: Net income attributable to noncontrolling interest		-		-	-			-		-	-

Net income attibutable to Elmira Savings Bank		1,108		1,057	4.8	%		2,187		2,093	4.5	%

Dividend on preferred stock		225		225	0.0	%		450		450	0.0	%
Income available to common shareholders	$	883	$	832	6.1	%	$	1,737	$	1,643	5.7	%


Basic earnings per share	$	0.28	$	0.31	-9.7	%	$	0.59	$	0.60	-1.7	%

Diluted earnings per share	$	0.28	$	0.30	-6.7	%	$	0.59	$	0.60	-1.7	%

Weighted average shares outstanding - basic		3,154,094		2,717,506	16.1	%		2,947,828		2,716,710	8.5	%

Weighted average shares outstanding - diluted		3,170,013		2,734,970	15.9	%		2,964,920		2,733,992	8.4	%

Dividends per share	$	0.24	$	0.23	4.3	%	$	0.47	$	0.46	2.2	%

ELMIRA SAVINGS BANK
AVERAGE BALANCES AND INTEREST RATES

(Dollars in Thousands)	For the Three Months Ended
	June 30, 2017						June 30, 2016
ASSETS:	Average Balance		Interest		Average Rate		Average Balance		Interest		Average Rate
Loans	$	450,724	$	4,789	4.24	%	$	457,695	$	4,744	4.15	%
Short-term investments		459		1	0.81			691		-	0.20
Securities		47,115		383	3.25			53,202		447	3.36
Total interest-earning assets		498,298		5,173	4.15			511,588		5,191	4.06

Noninterest-earning assets		65,224						53,756

TOTAL ASSETS	$	563,522					$	565,344

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits	$	378,473	$	720	0.76		$	384,003	$	763	0.80
Borrowings		42,000		267	2.52			52,055		374	2.84
Total interest-bearing liabilities		420,473		987	0.94			436,058		1,137	1.04

Noninterest-bearing liabilities		79,670						73,662
Shareholders' equity		63,379						55,624

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	563,522					$	565,344
Interest rate spread					3.21	%					3.02	%
Net interest income/margin			$	4,186	3.36	%			$	4,054	3.17	%

ELMIRA SAVINGS BANK
AVERAGE BALANCES AND INTEREST RATES

(Dollars in Thousands)	For the Six Months Ended
	June 30, 2017						June 30, 2016
ASSETS:	Average Balance		Interest		Average Rate		Average Balance		Interest		Average Rate
Loans	$	451,952	$	9,524	4.22	%	$	455,762	$	9,473	4.16	%
Short-term investments		1,153		3	0.53			536		-	0.19
Securities		48,399		814	3.37			56,416		951	3.37
Total interest-earning assets		501,504		10,341	4.13			512,714		10,424	4.07

Noninterest-earning assets		62,457						50,882

TOTAL ASSETS	$	563,961					$	563,596

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits	$	383,352	$	1,450	0.76		$	379,304	$	1,497	0.79
Borrowings		42,102		532	2.51			55,526		773	2.76
Total interest-bearing liabilities		425,454		1,982	0.94			434,830		2,270	1.04

Noninterest-bearing liabilities		78,517						73,255
Shareholders' equity		59,990						55,511

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	563,961					$	563,596
Interest rate spread					3.19	%					3.03	%
Net interest income/margin			$	8,359	3.34	%			$	8,154	3.18	%

			Quarter Ended
(Dollars in Thousands, Except Per Share Data)				6/30/2017			3/31/2017			12/31/2016			9/30/2016			6/30/2016

Operating Data

	Net income		$	1,108		$	1,079		$	1,042		$	1,202		$	1,057
	Net interest income			4,186			4,173			4,155			4,211			4,054
	Provision for loan losses			155			40			175			87			85
	Net security gains			-			-			-			-			-
	Non-interest income, ex. Net security gains			1,352			1,261			1,395			1,716			1,438
	Non-interest expense			3,781			3,828			3,888			3,976			3,891

Performance Statistics

	Net interest margin			3.36	%		3.32	%		3.23	%		3.24	%		3.17	%
	Annualized return on average assets			0.79	%		0.78	%		0.73	%		0.84	%		0.75	%
	Annualized return on average equity			7.01	%		7.74	%		7.38	%		8.54	%		7.65	%
	Annualized net loan charge-offs to avg loans			0.13	%		0.01	%		0.20	%		0.05	%		0.01	%
	Net charge-offs (recoveries)			144			16			231			53			14
	Efficiency ratio			68.3	%		70.4	%		70.1	%		67.1	%		70.8	%

Per Share Data

	Basic earnings per share		$	0.28		$	0.31		$	0.30		$	0.36		$	0.31
	Diluted earnings per share			0.28			0.31			0.30			0.36			0.30
	Dividend declared per share			0.23			0.23			0.23			0.23			0.23
	Book value			16.77			16.82			16.74			16.80			16.69
	Common stock price:
		High		21.75			21.75			22.25			21.50			20.10
		Low		19.65			20.28			18.50			18.85			18.06
		Close		20.30			21.60			20.45			19.91			19.66
	Weighted average common shares:
		Basic		3,154			2,739			2,731			2,724			2,718
		Fully diluted		3,170			2,757			2,750			2,741			2,735
	End-of-period common shares:
		Issued		3,405			2,850			2,845			2,839			2,832
		Treasury		94			94			98			98			98


Financial Condition Data:
General
	Total assets		$	574,332		$	556,644		$	573,450		$	567,450		$	574,721
	Loans, net			448,024			446,223			451,668			455,251			463,104
	Intangibles			12,329			12,334			12,340			12,349			12,360
	Total deposits			460,140			450,376			469,547			463,414			470,462

		Noninterest-bearing		77,027			71,870			70,330			72,102			70,803

		Savings		70,668			70,300			70,621			69,019			69,159
		NOW		86,896			86,633			85,822			86,787			121,875
		Money Market		24,859			27,697			28,889			25,715			25,172
		Time deposits		200,690			193,876			213,885			209,791			183,453
		Total interest-bearing deposits		383,113			378,506			399,217			391,312			399,659

	Shareholders' equity			65,280			56,103			55,723			55,792			55,382

Asset Quality

	Non-performing assets		$	3,494		$	4,234		$	5,289		$	5,345		$	5,622
	Non-performing assets to total assets			0.61	%		0.76	%		0.92	%		0.94	%		0.98	%
	Allowance for loan losses			4,298			4,287			4,263			4,319			4,285
	Allowance for loan losses to total loans			0.95	%		0.95	%		0.94	%		0.94	%		0.92	%
	Allowance for loan losses to
		non-performing loans		129.15	%		105.93	%		84.80	%		85.00	%		80.41	%
	Non-performing loans to total loans			0.74	%		0.91	%		1.11	%		1.12	%		1.15	%

Capitalization

	Shareholders' equity to total assets			11.37	%		10.08	%		9.72	%		9.83	%		9.64	%

For further information contact:
Thomas M. Carr, President & CEO
Elmira Savings Bank
333 East Water Street
Elmira, New York  14901
(607) 735-8660
tcarr@elmirasavingsbank.com

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